STATE OF WISCONSIN
LABOR AND INDUSTRY REVIEW COMMISSION
P O BOX 8126, MADISON, WI 53708-8126 (608/266-9850)

CHARLES M BLOSE, Applicant

ROBERTS TRUCKING INC, Employer

WEST BEND MUTUAL INS CO, Insurer

WORKER'S COMPENSATION DECISION
Claim No. 1998040771

Roberts Trucking, Inc. and West Bend Mutual Insurance Company submitted a petition for commission review alleging error in the administrative law judge's Findings and Interlocutory Order issued in this matter on April 9, 1999. The applicant submitted an answer to the petition and briefs were submitted by the parties. At issue is whether the applicant was a statutory employe of Roberts Trucking pursuant to Wis. Stat. § 102.07(8), when injured on April 13, 1997. The commission has carefully reviewed the entire record in this matter, and after consultation with the administrative law judge regarding the credibility and demeanor of the witnesses, hereby reverses her Findings and Interlocutory Order. The commission makes the following:

FINDINGS OF FACT AND CONCLUSIONS OF LAW

The applicant, whose birthdate is September 2, 1952, was an over-the-road trucker who while driving his truck on April 13, 1997, was involved in a motor vehicle accident which resulted in a permanent injury to his low back. He is no longer able to work as a trucker. Wis. Stat. § 102.07(8)(a) provides a presumption that independent contractors are employes under the Act. But Wis. Stat. § 102.07(8)(b) provides that independent contractors who meet all of nine enumerated conditions are not employes under the Act. The applicant stipulated to the fact that his employment as an over-the-road driver met all of these nine conditions except for the first one, which reads:

"Maintains a separate business with his or her own office, equipment, materials and other facilities."

The applicant did not have a formal office for his trucking business, but did the necessary paperwork at home, on the road, or at the carrier's office. He had no business phone and did not advertise. In 1996 the applicant's wife, who completed his tax returns, took a $1,672 business mortgage deduction on a Federal Schedule C, listing the applicant as proprietor of his trucking business. But after subsequently discussing the matter with the applicant's attorney, the applicant and his wife filed an amended return on December 19, 1998, eliminating the business mortgage deduction. Schedule C's listing the applicant as proprietor of his trucking business were also filed in 1995 and 1997.

The applicant was responsible for all truck maintenance expenses, and performed minor road maintenance himself using his own tools. Major repair or maintenance was performed by the carrier's mechanics, but the applicant fully reimbursed the carrier for the cost of such services. The applicant paid all his own license fees, tolls, taxes, and meals. The carrier took 15 percent of the gross payment for each haul and the applicant took the other 85 percent.

The applicant owned his own truck tractor and was lease purchasing a trailer from a leasing business which was legally separate from the carrier. He had a written agreement with the carrier first effective on February 11, 1994, titled Independent Contractor Service Agreement. In this he agreed to perform truck driving services for the carrier under specified conditions, including that he would obtain his own worker's compensation insurance coverage. He failed to obtain this insurance. The applicant was free to refuse loads the carrier asked him to haul. But he was required to obtain the carrier's permission to accept return loads, which he could obtain through freight brokers unassociated with the carrier, after making deliveries for the carrier. He did in fact obtain such return loads on his own, but the record does not specify how often he did this. Paragraph seven of the Independent Contractor Service Agreement allowed either the applicant or the carrier to terminate the agreement with 30 days notice to the other.

The applicant maintained a trucking business separate from the carrier's business. He owned substantial equipment in the form of his semi-tractor, which served as the only office and facility needed to operate his sole proprietorship. He was lease purchasing a trailer. He also possessed materials in the form of repair tools for breakdowns on the road, and a calculator and miscellaneous items used for traveling on his truck.

The administrative law judge found that the applicant was dependent on the carrier to generate work for him to do, and cited this in finding that the applicant did not maintain a separate business. As long as the applicant continued his business relationship with the carrier through the Independent Contractor Service Agreement, he did depend on the carrier to generate the majority of his hauling. However, this was a voluntary dependency, more accurately described as a business arrangement. Any independent contractor may contract his business to perform substantial services for one client or one other business over an extended period of time, services which are so substantial that they will consume all or nearly all of the independent contractor's business time. But this fact alone does not determine whether or not the independent contractor maintains a separate business. As was stated in Larson v. LIRC, 184 Wis. 2d 378, 392, 516 N.W.2d 456 (Court of Appeals 1994):

"As LIRC correctly contends, economic dependence is not a matter of how much money an individual makes from one source or another. Instead, it refers to the survival of the individual's independently established business if the relationship with the putative employer ceases to exist. See Princess House, 111 Wis. 2d at 70, 330 N.W.2d at 181. If the individual's business would also cease to exist, this fact is probative of an employer/employe relationship."

The record in this case demonstrates that the applicant possessed all the skills, equipment, and materials needed to perform his independent trucking services for any number of carriers. His contract with the carrier in this case was cancelable at will, subject only to a 30-day notice provision. The credible inference from all these facts is that the applicant's trucking business would have continued with another carrier had his relationship with the carrier in this case ceased to exist. The applicant freely chose to continue his business relationship with the carrier, but he was not dependent on it because he could, and actually did, find truck hauling work through other businesses. (1)

Employers Mutual Liability Ins. Co. v. ILHR Department, 52 Wis. 2d 515, 190 N.W.2d 907 (1971) was not cited in argument by either party. However, the commission concludes that it is appropriate to address this case as it relates to the case at hand. In Employers, the court upheld the commission's finding that the applicant in that case, Hendrix, was a statutory employe under Wis. Stat. § 102.07(8), as the statute then read. The statute was enacted in 1939 and provided at the time of Hendrix's 1968 accident:

"(8) Every independent contractor who does not maintain a separate business and who does not hold himself out to and render service to the public, provided he is not himself an employer subject to this chapter or has not complied with the conditions of s. 102.28(2), shall for the purpose of this chapter be an employe of any employer under this chapter for whom he is performing service in the course of the trade, business, profession or occupation of such employer at the time of the injury." Id. at 519.

In upholding the commission's determination that Hendrix had not maintained a separate business, the court cited the fact that Hendrix had driven a dump truck under lease agreements with Starline Trucking, and no one else, for the previous six years. Id. at 520. The court also relied on the fact that the record contained no evidence that Hendrix held himself out to render service to the public. Id.

Employers Mutual is distinguishable from the applicant's case for the following reasons. First, the language of the controlling statute has been significantly changed. The current Wis. Stat. § 102.07(8), created by Chapter 64, Laws of 1989, effective January 1, 1990, contains no requirement that an independent contractor hold himself or herself out to and render service to the public. But even were that requirement to be read as being retained in the current statute, the applicant's activities in securing loads from freight brokers other than the carrier would satisfy it. The current statute continues to require that a separate business be maintained, and the commission has previously discussed its reasons for concluding that the applicant did maintain a separate business.

Second, unlike Hendrix in Employers Mutual, the applicant entered a service agreement with the carrier, whereby he was designated to be an independent contractor. Hendrix entered into a lease agreement with Starline, which incorporated a union agreement, and designated him to be an employe. While the mere contractual designation of "employe" or "independent contractor" is not controlling, the facts reveal that these designations were accurate in these two cases. Hendrix had been working exclusively for Starline for six years prior to his injury. The applicant began his service with the carrier in February of 1994, but had been a skilled truck driver for approximately 25 years, and testified that he had been in the business of hauling freight with his semi-tractor pursuant to contracts for seven or eight years prior to the date of injury on April 13, 1997. This would have included contract hauling for several years prior to February of 1994. During the period of his service agreement with the carrier, the applicant, at his own initiative, secured loads from freight brokers other than the carrier. He was not limited to driving his truck exclusively for one company's business, as was Hendrix.

Third, Hendrix was "laid off" by Starline seven months after entering the lease agreement with it, and on every working day from the day of that layoff until he was injured, he went to the Starline office to see if work was available. He was injured on the last day he came in to check for work, and was asked by Starline's vice president to take some tools out of another driver's truck. Unlike the applicant, Hendrix had no business of his own and relied exclusively on Starline for work. He did not perform any trucking services for any other business.

Accordingly, the commission finds that the applicant was an independent contractor whose work for the carrier met all nine of the conditions set forth in Wis. Stat. § 102.07(8)(b), and that he was therefore not an employe of the carrier.

ORDER

The findings and order of the administrative law judge are reversed. The application is hereby dismissed.

Dated and mailed December 8, 1999
blosech.wrr : 185 :  ND § 2.13  § 2.14

/s/ David B. Falstad, Chairman

/s/ Pamela I. Anderson, Commissioner

/s/ James A. Rutkowski, Commissioner

MEMORANDUM OPINION

The commission consulted with the administrative law judge, who indicated that she did not infer from the applicant's testimony that he had performed contract hauling with his semi-tractor prior to his service with the carrier beginning in 1994. The record was not fully developed concerning the applicant's truck driving activities prior to 1994, but the applicant did respond to questioning as follows:

"Q And for how long had you been a skilled truck driver approximately?
A 25 years.
Q And as of April 13, 1997, you were engaged in the business of hauling freight with this 1988 Marmon tractor pursuant to contracts?
A Yes
Q And for how many years had you been doing that kind of work?
A Seven, eight years." (Hearing transcript, page 45)

The commission drew the inference from this testimony that the applicant had used his semi-tractor to perform contract hauling for another carrier or carriers for several years prior to 1994. This constituted additional evidence to the commission that the applicant did maintain a separate truck hauling business which served carriers other than Roberts Trucking. The administrative law judge did not indicate to the commission that her disagreement with the commission's inference was due to any credibility/demeanor impressions of the witnesses at the hearing; rather, she believed the commission's inference was speculative. However, the commission believes the above-quoted testimony by the applicant fully supports it inference.

Additionally, the commission concluded that even assuming the applicant had not performed contract hauling for another carrier or carriers prior to performing it for Roberts Trucking, he had established his own contract hauling business by virtue of his semi-tractor ownership, his securing and hauling of back loads from other freight brokers while operating under Roberts Trucking's Interstate Commerce licensing authority, and his ability to cancel his Independent Contractor Service Agreement with Roberts Trucking with 30 days notice.

cc: ATTORNEY GREGORY MEYER
STAFFORD & NEAL SC

ATTORNEY JOHN H SCHMID JR
AXLEY BRYNELSON LLP

Appealed to Circuit Court.  Affirmed July 10, 2000.

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Footnotes:

(1)( Back ) As long as he continued his contract with the carrier, the applicant performed his hauling services under that carrier's Interstate Commerce licensing authority. But with 30 days notice, he could contract with another carrier and utilize that carrier's licensing authority.